US regulators are reported to be considering civil fraud charges against the
rating agencies as part of a broader investigation into the sale of mortgage
debt in the run-up to the financial crisis.

The Securities and Exchange Commission is examining whether Standard & Poor's (S&P) and Moody's were too reliant on out-of-date information and failed to conduct adequate research when assessing the creditworthiness of mortgage debt, the Wall Street Journal reported.

The greater scrutiny of the role of Moody's and S&P, which is owned by McGraw-Hill, is said to be part of a wider examination of the role Wall Street banks played in fuelling the global market for US mortgage debt before the crisis.

It was a market that credit rating agencies played a critical role in as they awarded ratings on pools of mortgage debt. The SEC is said to be examining the role of a number of banks including Citigroup, JPMorgan Chase and Bank of America Merrill Lynch.

The rating agencies have already faced criticism that they awarded top ratings to pools of mortgages because it proved a profitable business in the years before the crisis erupted in 2007.

Once US house prices began falling in value, the value of that debt dropped dramatically.

S&P and the SEC declined to comment on the report. Moody's could not be reached.

A report by a Senate subcommittee published in April provided a sense of the scale of mortgage-backed debt that Wall Street banks were selling in the years before the crisis. Between 2004 and 2008, US banks sold nearly $2.5 trillion (£1.5 trillion) of Residential Mortgage Backed Securities (RMBS) and $1.4 trillion in collateralised debt obligations (CDOs).

CDOs, which are financial instruments made up of a mix of mortgages – typically of varying quality – played a key role in exacerbating the crisis as investors from around the world were heavy buyers.

S&P and Moody's are both now enjoying a rise in profits as companies take advantage of the still historically low level of interest rates to sell debt. Moody's has said that it expects revenues for this year to climb in the "high-single-digit" range.

S&P owner McGraw-Hill, which delivered a 16pc rise in first-quarter profits, has said that it is spending more to comply with new government regulations on ratings.